Daiwa lowered Quanfeng Holdings (02285)'s profit forecast for 2024-2025 by 40% to 48%.
The Zhitong Finance App learned that Daiwa released a research report stating that it downgraded the investment rating of Quanfeng Holdings (02285) from “superior to the market” to “holding” and lowered the 2024-2025 profit forecast by 40% to 48%, mainly due to the high operating expenses forecast for the period, the profit forecast for 2024 to 2026 was 9% to 15% lower than the market consensus, reflecting a more conservative operating leverage for the Group. The target price increased slightly from HK$23 to HK$24.
According to the report, the stock price of Quanfeng Holdings has risen by more than 30% in the past two days, which may be due to optimism about demand for replenishment. Although the bank is confident that the Group will recover a CAGR of about 15% revenue from 2023 to 2026, it believes that promoting channel expansion and product innovation under fierce competition will result in a higher operating expenses ratio, thus weakening profit recovery. The bank believes that after drawing on the experience of 2023, the group will focus on channel expansion and product diversification from 2024 to 2025, which will be transformed into continuous investment in operating expenses in the future. Therefore, it is believed that profit recovery may take longer than expected by the market.